Outsourcing: New York schools hired Future Technology Associates
Outsourcing: New York schools hired Future Technology Associates
Date: Wednesday, August 05, 2009 4:16 AM
<<<<< JOB DESTRUCTION NEWSLETTER No. 2046 -- 8/05/2009 >>>>>
The New York Daily did a series of articles about a dubious outsourcing
contract that the New York school system is involved with. To put it mildly,
the NY Department of Education (DOE) is getting taken to the cleaners!
The story begins when the Chancellor of the New York City DOE, which is the
largest public school system in the United States, recently cut the school
budget by $400 million and ordered a hiring freeze. Nothing unusual about that
as states wrestle with budget problems, but the story doesn't end there.
Chancellor Joel Klein decided to outsource a $95 million contract to work on
the DOE computer system to a Florida based contractor. The company that won
the contract is called "Future Technology Associates" (FTA). If you haven't
heard of this company don't be surprised because they don't even have a
company website (at least one I could find using Google). The NY Daily didn't
have much luck finding the company either:
As the Daily News reported last week, the company's only official
addresses, on Schermerhorn St. and its "headquarters" in
Jacksonville, Fla., are mail drops.
I got sort of lucky on one of my Google searches and found out a little more
about who this company is. There is a complaint filed by the SEC that accuses
its parent company of securities fraud.
... with its principal place of business in Sarasota, Florida.
Aerokinetic purports to be in the business of researching,
developing, and marketing alternative power technologies and
other innovative products, through its two wholly-owned
subsidiaries, Future Technology Associates, Inc. ("FTA) and
Scientific Technology Associates, Inc. ("STA"). Both
subsidiaries are incorporated in Delaware and Bridwell is
their sole shareholder.
Good luck to any of you that can find a website for Aerokinetic Energy or STA.
The more you try to find out about these companies the more they will seem to
evaporate!
The shadow company called Future Technology Associates has been winning the NY
DOE contracts since 2005. The contracts are very lucrative because they are
non-competitive "no bid".
Last year FTA billed NY taxpayers an average of $250,000 for 63 full-time
consultants that were supposedly needed to do the job. Those would be some
highly paid consultants -- but the kicker is that none of them got paid that
much -- and even more of a kicker is the worker demographics. A former
programmer at the company blew the lid on the whole thing when he said, "most
of the 60 people I worked with at FTA were from India."
The newspaper found out what the consultants are paid by looking at the
company's Labor Condition Applications for their H-1Bs.
Since it began its work for DOE, Future Technology Associates has
filed 19 applications with the U.S. Department of Labor for
permission to hire foreign workers under temporary H-1B visas.
On those applications, it claimed to be paying those employees from
$45,000 to $80,000, with the average at $65,000.
If you want to see a few of the LCAs, follow these instructions:
* Go to the DOL LCA database at:
http://www.flcdatacenter.com/CaseH1B.aspx
* Enter the following data and click search:
File to search: H-1B e-file 2007
Employer Name: Future Technology Associates Work State: Florida
This is a good illustration of just one of the reasons it's next to impossible
to figure out how many H-1Bs work in a given city or state.
These H-1Bs are listed in Florida but there is no telling how many of them
work for New York, or how many actually work in New York.
The first thing that caught my eye is the vague job title of "consultant"
instead of something more specific like "computer programmer". Deceptive data
should have immediately tipped off the DOL that something fishy was going on,
but of course it didn't. One of the things that needs to be changed about H-1B
besides abolishing the entire program is that employers should be required to
give specific job titles.
The second thing to notice is that none of the salaries were in the quarter
million dollar range that they duped the NY DOE into paying. Instead the
salaries ranged from $60-$80K.
So, what we have is a company that employs lots of H-1Bs and Indian nationals
(perhaps on other visas like L-1) and yet they can't even put up a company
website. My first thought was that Chancellor Joel Klein must be a complete
idiot for allowing this to happen, but one look at his biography proves that
theory wrong. His resume is very impressive. He has been involved with the law
and education for a very long time so mere stupidity doesn't seem plausible.
The quality of work at the FTA doesn't seem that good, especially considering
how expensive it is. To be blunt, the system crashes, there are schedule
delays, and the software doesn't manage databases well. Here is a comment made
by City Councilman Robert Jackson who is head of the Education
Committee:
"I've been complaining for years in Council budget hearings about
the delays in the DOE's meshing its accounting systems with that
of the Office of Management and Budget," Jackson said.
It would seem that New York schools could hire some very good Americans to do
this kind of work, especially if they were offered a quarter million dollars a
year. Not so says officials at the DOE who claim that the rates that FTA
charges are, "better than competitive" when compared with the rest of
corporate America. Wow! I had no idea that hiring American programmers was so
expensive nowadays!
Be sure to read the articles because the quality of the investigative
journalism is something that is rare nowadays. The last article was published
January 2008 and yet nobody seemed to pay attention.
REFERENCES:
http://www.nydailynews.com/ny_local/brooklyn/2009/07/22/2009-07-22_just_doesnt_compute_firm_set_for_95m_nobid_doe_contract_has_no_offices.html
Joel Klein is ready to give firm without offices new $95 million DOE contract
http://www.nydailynews.com/ny_local/2009/07/29/2009-07-29_computer_geeks_earn_more_than_klein_does.html
Computer geeks at Future Technology Associates earn more than Joel Klein does
http://www.nydailynews.com/news/2009/07/31/2009-07-31_computer_firm_bills_ed_dept_average_of_250g_per_consultant.html
Computer firm bills Ed Dept. average of 250K per consultant
http://www.nydailynews.com/ny_local/education/2008/01/11/2008-01-11_educrats_38m_sweet_tech_deal.html
Educrats' $38M sweet tech deal
http://www.ogs.state.ny.us/asp/purchase/snt/consulting/CompanyDetail.asp?Customer_ID=1274
NY Contract Info on Future Technology Associates
Joel Klein's bio:
http://schools.nyc.gov/Offices/mediarelations/ChancellorsBiography/Chancellors+Bio.htm
http://www.sec.gov/litigation/complaints/2008/comp20655.pdf
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v AERKINETIC ENERGY
CORPORATION, Defendants.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nydailynews.com/ny_local/brooklyn/2009/07/22/2009-07-22_just_doesnt_compute_firm_set_for_95m_nobid_doe_contract_has_no_offices.html
Joel Klein is ready to give firm without offices new $95 million DOE contract
Wednesday, July 22nd 2009, 9:16 AM
After cutting the schools budget by $400million and ordering a hiring freeze,
Chancellor Joel Klein is on the verge of handing a new $95 million contract to
a little-known Florida computer firm.
Future Technology Associates has enjoyed a no-bid DOE contract since its
founding in 2005 to integrate the school system's financial software with
those of other city agencies.
City records show the previous contract, along with several extensions, has
nearly doubled in cost - to more than $40 million from an original $22
million.
Under the latest extension, which expires next month, 13 FTA consultants are
being paid an average compensation of nearly $190,000 annually by the DOE.
Company President Tamer Sevintuna, for example, receives $306,000 as "senior
manager." Three other FTA "managers," John Krohe, Derek Wong and Nilo Natural,
each get $245,000.
With that much money flowing, you'd think the firm could afford a real office.
It appears to have none.
Sevintuna officially lists corporate headquarters as 9378 Arlington
Expressway, Jacksonville, Fla., Suite 305. A Daily News check of that address
revealed it to be only a rented post office box.
He also lists a Brooklyn address for the firm, 41 Schermerhorn St., Suite 275.
A visit there showed it to be a small residential building - with no sign of
any Future Technology Associates.
FTA's employees do all their computer work out of DOE facilities.
Sevintuna declined to discuss his firm or what it does for the school system.
"Talk to the Board of Education," he said before hanging up.
Late last year, the DOE put out a request for proposals for a new five-year
contract to carry on the computer integration work FTA has been doing. This
occurred after Public Advocate Betsy Gotbaum blasted a DOE plan to simply hand
the firm a new $38 million no-bid contract.
This, of course, is nothing new under Klein and Mayor Bloomberg. Both state
Controller Tom DiNapoli and city Controller William Thompson have issued
scathing reports in recent months about DOE's mushrooming use of no-bid
contracts and the runaway costs that often result.
DiNapoli's report, released in May, found that the DOE awarded 291 no-bid
contracts between July 2005 and June 2008 for more than $340 million and in
most cases "failed to properly document" the reason why.
One of the great dangers of mayoral control of the schools, Klein's critics
say, is that the chancellor gets to hand out whatever contracts he wants and
pays only lip service to the age-old governmental practice of competitive
bidding.
On the surface, the proposed new contract did go through a competitive
process, with the bids due in February. Sources in the DOE's technology
division said the bid requirements appeared to be tailored for FTA, and no one
was surprised when the firm emerged as the apparent winner.
FTA's price came in at $95 million, the sources said.
DOE spokeswoman Melody Meyers denied a final price has been reached, but
refused to say any more.
"We are still in negotiations and accordingly will not discuss specifics,"
Meyers said.
"Everyone is shocked that they're paying these outside consultants so much
money for work that DOE's own people could be doing," one source said.
Once DOE officially announces the winner of the computer mega-contract in the
next few days, the lucky firm will presumably hire a slew of new six-figure
consultants to do the work.
Not a single one of those new hires will appear in any record of the DOE as an
employee. Klein will continue to tell us there is a financial crisis and a
hiring freeze, and the school system must tighten its belt.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nydailynews.com/ny_local/2009/07/29/2009-07-29_computer_geeks_earn_more_than_klein_does.html
Computer geeks at Future Technology Associates earn more than Joel Klein does
Wednesday, July 29th 2009, 4:00 AM
Smith for News
Pay for each of the FTA employees is equal to that of Schools Chancellor Joel
Klein, the city's highest-paid executive.
Related News
Articles
Taxpayers shelled out an average of $250,000 last year for each of 63 computer
consultants a little-known Florida-based firm supplied to the Department of
Education.
That's more than $15.7 million of our money going to Future Technology
Associates, which landed a DOE contract in 2005 - the same year the company
was founded. The company's job is to integrate the school system's financial
accounting system with other city agencies.
That contract began at $2.5 million a year. Since then, it has been repeatedly
extended - mushrooming to $15.7 million in fiscal year 2009.
As a result, the average pay for each of the FTA employees is equal to that of
Schools Chancellor Joel Klein, the city's highest-paid executive.
Several company employees received considerably more than Klein, DOE records
show.
FTA director Tamer Sevintuna, for example, snared $348,000 as senior manager
for the project. His second-in-command, Jonathan Krohe, logged in at $345,000.
Senior consultant Sesha Narayanasamy received $276,000.
Those costs also include what the company pays for its employee health and
fringe benefits.
As the Daily News reported last week, the company appears to have no other
business aside from its DOE contract. Its only official addresses - in
Jacksonville, Fla., and on Schermerhorn St. in Brooklyn - are just mail drops.
Most of its employees work full-time at the DOE's computer center in downtown
Brooklyn. As many as a dozen are working with H1B non-immigrant visas for
foreigners with special skills.
FTA chief Sevintuna refused to talk to The News last week about his firm.
He referred all questions to the DOE.
For the kind of money the company is receiving, you'd think its product would
be first-class.
City Councilman Robert Jackson, head of the Education Committee, thinks
otherwise.
"I've been complaining for years in Council budget hearings about the delays
in the DOE's meshing its accounting systems with that of the Office of
Management and Budget," Jackson said.
Jackson's response when he learned what FTA consultants were billing the
school system for their work was: "Damn, I'm stunned, especially when you
consider the huge cuts in our school budgets."
DOE officials defend the quality of FTA's work - and the price of its
consultants.
The company has "met the timetables and goals set by the city for the DOE's
integration [with the city system]," DOE spokeswoman Melody Meyer said.
"Their rates are better than competitive," said Photeine Anagnostopoulos, the
DOE's chief operating officer.
How could she be so sure, since the company has operated under no-bid
contracts for four years?
The whole idea of a public bidding process, after all, is to force companies
to compete for the best price.
"We know it [FTA] is competitive because we know what the rates are,"
Anagnostopoulos said. In corporate America, a quarter million a year for a
computer consultant is normal, she said.
"You don't have to bid every plumbing job in your house because you know what
plumbers' rates are," she said.
Last year, the DOE tried to extend FTA's no-bid deal for several more years by
handing it a new $38 million contract. Public Advocate Betsy Gotbaum cried
foul, and Klein was forced to arrange a competitive process.
Those bids were submitted in January and the agency has still not announced a
winner. DOE sources say FTA is about to be given the new contract for $95
million for the next five years.
If so, the company will get to hire even more consultants at an average of
$250,000 each. All of this in a time of recession, deficits and education
cuts.
Who says public schools don't pay?
Correction: A headline on a July 22 column incorrectly claimed that the new
$95 million computer contract the DOE will soon award for continuation of
FTA's work was a no-bid contract. As the column reported, the DOE solicited
bids in January and is expected to announce a winner soon.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nydailynews.com/news/2009/07/31/2009-07-31_computer_firm_bills_ed_dept_average_of_250g_per_consultant.html
Computer firm bills Ed Dept. average of 250K per consultant
Friday, July 31st 2009, 4:00 AM
Related News
Articles
The computer firm that billed taxpayers an average of $250,000 last year for
each of 63 full-time consultants it gave the Department of Education appears
to have paid those consultants just a fraction of that amount.
Future Technology Associates has held a no-bid contract from the DOE for the
past four years to integrate the school system's financial management software
with that of other city agencies.
Under the contract, the company, which seems to have no other clients,
received more than $15.7 million from the school system in fiscal year 2009.
Since it began its work for DOE, Future Technology Associates has filed 19
applications with the U.S. Department of Labor for permission to hire foreign
workers under temporary H-1B visas.
On those applications, it claimed to be paying those employees from $45,000 to
$80,000, with the average at $65,000.
Those salaries represent about one-fourth what FTA charged the city for those
workers.
Even if you throw in health insurance and other fringe benefits the company
pays for, it still represents a huge markup on its actual labor costs.
FTA consultants operates free of charge out of the DOE's downtown Brooklyn
computer center.
As the Daily News reported last week, the company's only official addresses,
on Schermerhorn St. and its "headquarters" in Jacksonville, Fla., are mail
drops.
"None of us made anywhere near $100,000," said a former FTA consultant who
claims he quit the company in disgust because of all the money the DOE was
"wasting on an archaic system that was always crashing."
"They had all 60 of us working in one room that was hot, dirty and absolutely
not what you would expect from such a well-funded business," the former
consultant said.
He asked not to be identified because he now works as a programmer at a major
accounting firm.
The man also expressed surprise when told the company claimed to employ only
19 H-1B employees.
"Most of the 60 people I worked with at FTA were from India," he said.
"Every few months, someone was heading back home temporarily because their
visa had expired. A few even got paid while they worked on the project back in
India."
FTA's senior managers, Tamer Sevintuna and Jon Krohe, did not respond to phone
calls and e-mail requests for information on the DOE contract and their
company's use of H-1B workers.
Sevintuna billed the DOE $348,950 last year for his labor, while Krohe charged
$345,275. A dozen other FTA consultants billed more than $250,000 each.
None of the company's employees was paid at a rate less than $190,000
annually, DOE spokeswoman Melody Meyer said.
DOE officials defend the quality of FTA's work. They say its rates are "better
than competitive" when compared with the rest of corporate America.
Still, the mushrooming use of foreign computer workers by private companies
has been a problem for years.
Now government is getting into the act.
"We have a big concern about the displacement of U.S. workers," said John
Miano, a founder of the Programmers' Guild, a professional society for
technical workers.
The Bloomberg administration, after all, has a hiring freeze. It cut hundreds
of millions of dollars from the school system's budget.
How does it justify shelling out so much money for foreign computer workers
under a no-bid contract?
Even worse, how do you explain such a huge portion of that money going into
the profits of the owners instead of to the people who do the work?
jgonzalez@nydailynews.com
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nydailynews.com/ny_local/education/2008/01/11/2008-01-11_educrats_38m_sweet_tech_deal.html
Educrats' $38M sweet tech deal
By ERIN EINHORN
DAILY NEWS STAFF WRITER
Friday, January 11th 2008, 4:00 AM
The city education department is considering awarding the largest no-bid
contract in its history to a technology firm that would collect $38.5 million.
The move - benefiting a Jacksonville, Fla., company called Future Technology
Associates - comes as state Controller Thomas DiNapoli launches an audit into
city educrats' widespread use of no-bid contracts, which are awarded without
soliciting bids or proposals from other firms that could do the work.
"Unlike every other government entity, the Department of Education has no
fiscal oversight and very little accountability," said Public Advocate Betsy
Gotbaum, whose office requested DiNapoli's audit.
DiNapoli hasn't determined the scope of his audit, a spokeswoman said, but
state auditors will look at contracts that could include a $15.8 million
2006 contract with Alvarez & Marsal, the consultants who recommended last
year's disastrous school bus reorganization.
DiNapoli would also look at the contract with Future Technology Associates, if
it is awarded.
An announcement posted on the Web site of the Department's contracting office
said two contracts - one for $26.7 million and another for $11.8 million -
were considered in a closed-door meeting on Jan. 3.
Both contracts would merge city and school data systems, with the larger of
the two merging budget systems and the smaller merging payroll systems.
Schools contracts director David Ross said he had doubts about the cost
estimates and other features of the proposals and postponed action on them.
Though the proposals would have extended smaller existing contracts, Ross said
he would look to find ways to award the contracts using a competitive process.
The decision to postpone the matter was unrelated to the DiNapoli audit, he
said.
The posted proposal showed that the two contracts would have had a start date
of six months ago - July 2007 - but Ross said that was an error and that
Future Technology's current contract has not expired.
The firm was hired with an estimated $7.5 million, three-year no-bid contract
in 2005 after it broke away from a firm called Tier Technologies that helped
build the computer system but charged a higher rate, Ross said.
Records show that the city paid $750,000 to Tier at the time to buy Future
Technology consultants out of their contracts with Tier.
eeinhorn@nydailynews.com
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